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Augmented reality (AR) - at this fledgling stage at least - projects and amplifies that which already exists. At a basic level, it's a series of glorified apps escaping a hand-held format for a pseudo-holographic one. It will also allow us to alter our surroundings. Yet this technology is about to take over our environments in a much deeper sense.

The effects of AR on our behaviour and identity will be substantial. Saturated with information, we will have more choice than ever, provided we can afford the options on show. Our lives will arguably become far more convoluted. The freeing up of time and energy from menial tasks may be offset by competing interests vying for our attention.

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Hyper-Reality, Keiichi Matsuda's short film exploring Medellin, Colombia in augmented reality, suggests an intensified commodification of our desires and insecurities with sirens promising "Find true love", "Lose weight, feel great" and "Plastic surgery - free virtual consultation". Advertising, the film suggests, will go beyond signage to become enmeshed in the processes of daily life. Reality will be partly, perhaps indecipherably, comprised of layers of sponsored content.

There is little denying the benefits of being able to instantly orientate yourself in an unfamiliar area or to communicate with others without the use of a computer or phone. The problem, however, with completely removing inefficiencies is that they are often where freedoms reside. Our tastes, experiences and responses, for instance, will be monitored to supply us with a personalised view of the city. This will be employed mainly to sell us products and lifestyles. As with all incarnations of the smart city, this will also be the surveillance city. States and markets will have total access to our inner worlds; not telescreens looking at us, but out of us.

Extending social networks into the physical plane, it would be possible to view people annotated with their chosen profiles. Following the models of social media, there will no doubt be visibility settings and, with AR generally, many people will choose to avoid the medium altogether. As the use of AR becomes more widespread, the incentives and pressure to join in will increase, mirrored by the suspicion felt (personally and professionally) towards those who prefer to remain outside it.

AR may bring benefits in terms of self-preservation. Its connectivity could facilitate the automatic contacting of emergency services in the event of an accident. Yet it may well be the distractions of AR that cause the accident in the first place.

Ultimately, AR will prosper by how well it interacts with people. Its demise, in the wake of Google Glass, is greatly exaggerated. Privacy concerns may be sidelined once the hardware is no longer immediately visible to others: Samsung, for example, is already working on AR contact lenses.

Virtual reality technology may seem to have left augmented reality behind, but this is to assume that the two are separate technologies. The immersive worlds proposed by Magic Leap and Microsoft's HoloLens have huge hybrid potential; an optimism shared by the US Navy which recently revealed it is developing an Iron Man-style AR diving helmet.

The real challenge will be how we can adapt this technology creatively, subversively and idiosyncratically - going beyond corporate and hegemonic design. What we will undoubtedly gain will be balanced precariously with what we'll lose. The challenge, then, is an old one: how exactly do we make the inner world, the outer world and their ever-changing border our own?

Darran Anderson is the author of Imaginary Cities (Influx Press).

The WIRED World in 2017 is WIRED's fifth annual trends briefing, predicting what's coming next in the worlds of technology, science and design

This article was first published in the The WIRED World in 2017 issue of WIRED magazine